Telstra caps cost of calls as prices fall

Telstra
has decided to limit the amount many of its customers pay for mobile phone calls.

Where customers could previously be hit by bills worth thousands of ­dollars for exceeding their monthly call allowance, the maximum Telstra now charges for phone calls is $130 a month for customers on new contracts. The limit applies regardless of how many standard voice calls are made.

Telstra is the last of the three big phone companies to make the change, ending an era for consumers and phone carriers.

Mobile voice phone calls were once the cornerstone of the industry and generated billions of dollars in ­revenue.

The commercial value of voice calls has been eroded by falling prices and rising demand for internet data driven by the popularity of smartphones.

Telstra contacted Optus to say it was changing its plans in such a way that the ad would no longer be valid.

A Telstra spokesman said the limit was a “safety net" designed to protect customers from unexpected charges.

“The most customers will pay for excess calls to standard Australian numbers is $70," he said.

Profits from calling decline

The profitability of phone calls has plummeted even as the popularity of mobile phones further rises. Telstra customers spent 20.4 billion minutes talking on the phone in 2012-13, up from 16.9 billion minutes the year before.

Increased competition and the rise of bundled plans is pushing the price of mobile phone calls down. Telstra’s revenue from phone calls fell for the first time in 2009-10, to $3.3 billion.

Since then the profitability of voice calls has steadily dropped.

Phone companies are now concentrating on charging more for data, according to Bank of America Merrill Lynch analyst Sameer Chopra.

Optus and Vodafone are also offering cheaper phone calls to stop customers from using smartphone programs like Skype and WhatsApp to make calls over the internet.

Revenue from phone calls dropped by 19 per cent per minute in 2013 but was replaced by data, according to Mr Chopra.

“We estimate it’s now close to about 7¢ per minute across all three telcos," he said in a report. “By comparison they were making 17¢ per year in 2008."

He forecast rising demand for data would help provide local phone companies with an extra $500 million in ­revenue over the next 12 months.